Domestic fiscal policy drives Swedish postwar business cycles, study finds.
The researchers studied the causes of economic ups and downs in Sweden after World War II. They used a model to see if foreign or domestic events had a bigger impact on the economy. By including unpredictable government spending changes, they found that domestic events, like changes in government spending, were more important for the economy than foreign events. Foreign events were more important for changes in the value of Swedish money and the country's trade balance.